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Optimal pre-merger notification mechanisms - incentives and efficiency of mandatory and voluntary schemes

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Author Info
Gonzalez, Aldo
Benitez, Daniel

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Abstract

The authors compare the two merger control systems currently employed worldwide: a mandatory system based on merger size threshold and a voluntary system with ex-post monitoring and fines. The voluntary system possesses two informational advantages: (i) the enforcement agency employs more information -verifiable and non verifiable parameters- to decide the set of mergers to investigate, and (ii) the first move of merging firms reveals useful information to the agency about the competitive risk of a merger. If fines for undue omission to notify are upward limited, then a mixed mechanism is optimal, where small transactions are under a voluntary regime while the big mergers are obliged to report. Remedies for fixing anticompetitive mergers act as an instrument that induces firms to notify the operation, improving further the advantage of the voluntary mechanism.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4936.

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Date of creation: 01 May 2009
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Handle: RePEc:wbk:wbrwps:4936

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Related research
Keywords: Microfinance; Bankruptcy and Resolution of Financial Distress; Corporate Law; Economic Theory&Research; Small Scale Enterprise;

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  1. Johnson, Ronald N & Parkman, Allen M, 1991. "Premerger Notification and the Incentive to Merge and Litigate," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(1), pages 145-62, Spring.
  2. Elzinga, Kenneth G, 1969. "The Antimerger Law: Pyrrhic Victories?," Journal of Law & Economics, University of Chicago Press, vol. 12(1), pages 43-78, April.
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This page was last updated on 2009-12-4.

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